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TODAY’S S&P 500 SET-UP – January 18, 2012

As we look at today’s set up for the S&P 500, the range is 14 points or -0.59% downside to 1286 and 0.49% upside to 1300. 

 

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - 1

THE HEDGEYE DAILY OUTLOOK - 2

THE HEDGEYE DAILY OUTLOOK - 3

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 682 (1604) 
  • VOLUME: NYSE 810.58 (-2.09%)
  • VIX:  22.20 +6.17% YTD PERFORMANCE: -5.13%
  • SPX PUT/CALL RATIO: 1.42 from 1.82 (-21.98%)

CREDIT/ECONOMIC MARKET LOOK:

GROWTH – we hosted a dinner w/ 10 PMs at Patroon last night and it was clear that the most contrarian call we have right now is the opposite of the call we were making at the same dinner 12 months ago – We think US Growth estimates/expectations are too low for 2012. World Bank cutting US growth to 2.2% for 2012 (down from 3%) when they should be raising estimates from 1.5% > 2.2%.

SENTIMENT – plenty are still frozen by this melt-up. Being net short is a train wreck position for 2012 YTD and being really long everything that’s really working means you had to buy it when it was getting clocked NOV/DEC. Beta chasing remains reality in the career risk mgt exercise; VIX 22.20 is a bearish TREND; and the II Sentiment survey is leaning too bullish at 2000 bps wide.

  • TED SPREAD: 54.20
  • 3-MONTH T-BILL YIELD: 0.03%
  • 10-Year: 1.85 from 1.87
  • YIELD CURVE: 1.63 from 1.64

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage, week of Jan. 13 (prior 4.5%)
  • 7:45am/8:55am: ICSC/Redbook weekly retail sales
  • 8:30am: PPI (M/m), Dec., est. 0.1% (prior 0.3%)
  • 9:00am: Net Long-term TIC Flows, Nov., est. $40.0b (prior $4.8b)
  • 9:15am: Industrial Production, Dec., est. 0.5% (prior -0.2%)
  • 9:15am: Capacity Utilization, Dec., est. 78.1% (prior 77.8%)
  • 9:30am: Fed’s Tarullo to testify on Volcker rule in Congress
  • 10am: NAHB Housing Market Index, Jan., est. 22 (prior 21)
  • 11:30am: U.S. to sell $30b 4-week bills

WHAT TO WATCH: 

  • World Bank cuts global growth forecast to 2.5% vs 3.6% (biggest cut in 3 yrs); says recession in the euro region threatens to exacerbate slowdown in emerging markets such as India, Mexico
  • Goldman reports 4Q results pre-mkt; analysts see weaker trading, investment banking rev. driving higher comp. expense ratio, potential negative oper. leverage
  • Greece close to deal with private creditors that would give them cash, securities with mkt value of ~32c per euro of govt. debt, said member of creditors’ cmte
  • Jerry Yang stepping down from Yahoo board of directors, its management; may remove barrier to Asia asset sale
  • Sumitomo Mitsui Financial will invest $93m in Moelis
  • Industrial production probably increased 0.5% in Dec., after declining 0.2% in Nov., economists’ est. ahead of today’s report
  • ASML forecast 1Q higher bookings; 4Q rev. beat est.; Taiwan Semi forecast 1Q rev. above est.
  • Google joins Wikipedia and other websites in opposing Hollywood-backed Congress anti-piracy measures
  • Samsung Electronics says it’s not interested in buying RIM
  • Apple filed another suit in Germany, seeking to ban sales of Samsung Electronics’s smartphones
  • IEA cuts estimate for global oil demand growth to to 1.1mbbl/d
  • Countrywide Financial co-founder Angelo Mozilo home loans to be examined after letter released by House Democrat yesterday

  EARNINGS:

      • Bank of New York (BK) 6:30 a.m., $0.53
      • PNC Financial (PNC) 6:33 a.m., $1.49
      • US Bancorp (USB) 6:45 a.m., $0.63
      • Viterra (VT CN) 7 a.m., $0.09
      • State Street (STT) 7:06 a.m., $0.94
      • Goldman Sachs (GS) 7:30 a.m., $1.23
      • Northern Trust (NTRS) 7:30 a.m., $0.68
      • Fastenal Co (FAST) 7:50 a.m., $0.29
      • Charles Schwab (SCHW) 8:45 a.m., $0.13
      • Plexus (PLXS) 4 p.m., $0.48
      • Wintrust Financial (WTFC) 4:01 p.m., $0.37
      • CLARCOR (CLC) 4:02 p.m., $0.67
      • F5 Networks (FFIV) 4:05 p.m., $1.01
      • Kinder Morgan (KMI) 4:05 p.m., $0.29
      • Kinder Morgan Energy Partners (KMP) 4:05 p.m., $0.61
      • eBay (EBAY) 4:15 p.m., $0.57
      • Xilinx (XLNX) 4:20 p.m., $0.37
      • SLM (SLM) 4:30 p.m., $0.49
      • HB Fuller Co (FUL) 5:30 p.m., $0.59
      • CVB Financial (CVBF) 8:45 p.m., $0.21

 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES

  • South Africa Corn Export Push May Exhaust Stocks: Commodities
  • Oil Rises to Three-Day High as Iran Tension Counters Economy
  • Sugar Rises on Tight Supply Before Brazil’s Crop; Coffee Climbs
  • Soybeans Drop as Rains in South America May Help Revive Crops
  • Gold May Climb in London on IMF Lending Boost, Weaker Dollar
  • Copper Falls 0.1% in London Trading, to $8,190.50 a Metric Ton
  • IEA Cuts 2012 Oil Demand Forecast, Warns of Further Decline
  • Gazprom Price Retreat Offers EON Hope as Euro Crisis Cuts Demand
  • Testing of Orange Juice for Fungicide May Continue Through July
  • U.S. Feedlots Buy Fewer Cattle as Supplies Tighten, Survey Says
  • Pentagon Aids Biofuels With $12 Million Buy: Chart of the Day
  • LontohCoal May Double H.K. IPO to $1 Billion for Zimbabwe Mine
  • Myanmar Buoyed by $8.6 Billion Port as Sanctions Abate: Freight
  • COMMODITIES DAYBOOK: BHP Iron Ore Production Rises to Record
  • Oil Inventories Climb a Fourth Week in Survey: Energy Markets
  • Record Petrobras-Vale Yield Gap Spurred by Supply: Brazil Credit
  • BHP Iron Ore Production Rises to Record, Beating Estimates

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS

 

GERMANY – both German Bunds and German stocks are flat out ripping at this pt of 2012. With the DAX now up +8.2% already for the YTD and 3.4B in 2yr notes coming in at 0.17%, the yield on Bunds is now lower than USTs and return on DAX for YTD higher than the SP500. A move > 6502 in the DAX (its long-term TAIL) could make this move a much bigger one. Germany likes a lower Euro.


THE HEDGEYE DAILY OUTLOOK - 6

 


ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

The Hedgeye Macro Team